Question 1

Regarding ratification of pre-incorporation contracts,how has the CBCA resolved the problem presented by common law?

Accepted Answer

Under the CBCA,a corporation ratifies a

Question 2

In addition to the licensing and prospectus provisions,the legislation has introduced further controls on the securities industry.Give a couple of examples.

Accepted Answer

Examples might include: (1)the securitie

Question 3

Corporations are always liable in tort for contracts entered into with third parties.

Accepted Answer

A) True 
 B)False

Question 4

The Criminal Code of Canada contains some offences that are applicable to corporate conduct.With respect to whistle-blower retaliation,it is an offence to

Accepted Answer

A) threaten a whistle-blower or potential whistle-blower. 
B) discipline a whistle-blower or potential whistle-blower. 
C) demote a whistle-blower or potential whistle-blower. 
D) request a statement from a whistle-blower or potential whistle-blower. 
E) fire a whistle-blower or potential whistle-blower. 
A) threaten a whistle-blower or potential whistle-blower. 
B) discipline a whistle-blower or potential whistle-blower. 
C) demote a whistle-blower or potential whistle-blower. 
D) request a statement from a whistle-blower or potential whistle-blower. 
E) fire a whistle-blower or potential whistle-blower.

Question 5

The principle that a person dealing with a corporation is entitled to assume that its internal procedural rules have been followed unless it is apparent that such is not the case is known as the indoor management rule.

Accepted Answer

A) True 
 B)False

Question 6

Explain how directors and senior officers can be held liable when the corporation commits a criminal offence.

Accepted Answer

The courts have found the actions of dir

Question 7

Ward Bond was the sole director of Able Contractors and Hauling Ltd.The corporation entered into a contract to dig up and remove a below-ground storage tank that contained a residue of pesticides.The corporation dug up the tank and placed it on a flatbed truck for transportation to an approved disposal facility.While the tank was being transported,it started to rain.The driver called Ward to ask what he should do,because he had no tarpaulin to cover the tank.Ward knew that a tarpaulin would be useful but the cost would be several thousand dollars,so Ward instructed the driver to park the truck until the rain had stopped.The driver did so in a restaurant parking lot and the rain washed out the pesticide residue from the tank.It leaked onto the parking lot below the truck.The driver noticed this and called Ward to find out what to do and Ward told him to leave immediately and go to the disposal facility.The pesticide residue was ultimately discovered and led to a clean-up at a cost of $35 000.What potential liability is there as a result of this situation? Who do you think will be liable,and what is the nature of their liability?

Accepted Answer

The corporation has civil liability,whic

Question 8

Offences under the Criminal Code of Canada are both criminal and regulatory in nature.

Accepted Answer

A) True 
 B)False

Question 9

Schemes of government regulation resemble traditional criminal law because

Accepted Answer

A) damage is done through committing a tort rather than through breach of a contract. 
B) conviction for an offence is typically punished by imprisonment. 
C) it must be proved the accused not only committed the offence,but also was at fault and had mens rea (a guilty mind). 
D) they are enforced by the RCMP. 
E) they prohibit certain kinds of conduct and punish those who ignore the prohibitions. 
A) damage is done through committing a tort rather than through breach of a contract. 
B) conviction for an offence is typically punished by imprisonment. 
C) it must be proved the accused not only committed the offence,but also was at fault and had mens rea (a guilty mind). 
D) they are enforced by the RCMP. 
E) they prohibit certain kinds of conduct and punish those who ignore the prohibitions.

Question 10

Directors may become personally liable to the corporation for deficiencies if,when they pay out dividends,the corporation cannot meet

Accepted Answer

A) a shortage of working capital. 
B) the test of bankruptcy. 
C) a scheduled bond redemption. 
D) current corporate indebtedness. 
E) the solvency test. 
A) a shortage of working capital. 
B) the test of bankruptcy. 
C) a scheduled bond redemption. 
D) current corporate indebtedness. 
E) the solvency test.

Question 11

Under the regulatory offence of "strict liability," the standard that must be met for obtaining a conviction is

Accepted Answer

A) the same as under the regulatory offence of "absolute liability." 
B) to let the accused try to avoid liability by proving that she or he was completely unaware of the regulation. 
C) to satisfy the court that the breach is of the regulation rather than a statute. 
D) where the doing of the prohibited act raises a presumption that an offence has been committed-unless the accused can prove she or he took all reasonable care. 
E) to prove the existence of mens rea (a guilty mind). 
A) the same as under the regulatory offence of "absolute liability." 
B) to let the accused try to avoid liability by proving that she or he was completely unaware of the regulation. 
C) to satisfy the court that the breach is of the regulation rather than a statute. 
D) where the doing of the prohibited act raises a presumption that an offence has been committed-unless the accused can prove she or he took all reasonable care. 
E) to prove the existence of mens rea (a guilty mind).

Question 12

Pat is one of 16 owners of Camstick Ltd.This corporation has been fined $30 000 for polluting the town's water supply.Pat is on the board and now finds himself charged and being convicted on the same matter.The judge finds that Pat personally knew and did nothing about the polluting.Not only that,but he has no remorse concerning the incident.The judge is now giving him,under the Environmental Protection Act,the maximum prison term of

Accepted Answer

A) 12 months. 
B) 10 years plus $50 000. 
C) 90 days. 
D) 5 years plus $10 000. 
E) 3 years plus $5 000. 
A) 12 months. 
B) 10 years plus $50 000. 
C) 90 days. 
D) 5 years plus $10 000. 
E) 3 years plus $5 000.

Question 13

What is meant by the indoor management rule?

Accepted Answer

Corporations enter into contracts with t

Question 14

Explain why the insolvency and maintenance of capital tests are important when it comes to corporations.

Accepted Answer

This is because with corporations,unlike

Question 15

In spite of the fact that a corporation does NOT meet the solvency test,it can

Accepted Answer

A) buy back shares. 
B) pay wages to employees. 
C) pay dividends. 
D) make loans to directors. 
E) none of the above 
A) buy back shares. 
B) pay wages to employees. 
C) pay dividends. 
D) make loans to directors. 
E) none of the above

Question 16

In order to avoid an environmental accident,a business should take all of the following steps EXCEPT

Accepted Answer

A) review current practices to learn whether any of their activities create a concern about health,safety,or breach of environmental regulations. 
B) keep up-to-date with current technology and best practices adopted across their industry. 
C) take every reasonable precaution to meet the latest standards. 
D) directors should not try to educate themselves about the business's activities and risks but rather hire knowledgeable individuals who can deal with potential environmental problems. 
A) review current practices to learn whether any of their activities create a concern about health,safety,or breach of environmental regulations. 
B) keep up-to-date with current technology and best practices adopted across their industry. 
C) take every reasonable precaution to meet the latest standards. 
D) directors should not try to educate themselves about the business's activities and risks but rather hire knowledgeable individuals who can deal with potential environmental problems.

Question 17

Hazel was deliberately cheated by a clerk at the Hamilton Bay Corp.Can the corporation be found guilty of a criminal offence?

Accepted Answer

A) Yes,it can,since there is obviously a "directing mind" in this act. 
B) Yes,it can,since the clerk was an employee working at her job at the time. 
C) No,it cannot,because she was a low-level employee. 
D) Yes,it can,because there is vicarious liability to the corporation. 
E) No,it cannot,since corporations cannot be criminally found guilty. 
A) Yes,it can,since there is obviously a "directing mind" in this act. 
B) Yes,it can,since the clerk was an employee working at her job at the time. 
C) No,it cannot,because she was a low-level employee. 
D) Yes,it can,because there is vicarious liability to the corporation. 
E) No,it cannot,since corporations cannot be criminally found guilty.

Question 18

Marian,Phillis,and Lauren are three directors at A Mart Supplies Ltd.The corporation has $150 000 in assets,including capital and $110 000 in debt.
(1)If the directors passed a resolution redeeming all the preferred shares of the corporation for $50 000,what remedy would unpaid creditors of the corporation have and against whom?
(2)If Phillis and Lauren voted in favour of a directors' resolution approving the corporation's purchase of artwork from an unknown artist for $60 000 for resale purposes and it turned out that the work was unsaleable and was ultimately disposed of for less than $10 000,what remedy would unpaid creditors have and against whom?

Accepted Answer

(1)The directors have breached the solve

Question 19

A corporation that is not paying its creditors in a timely fashion is probably insolvent.

Accepted Answer

A) True 
 B)False

Question 20

No knowledge of the law is a good defence to an absolute liability offence.

Accepted Answer

A) True 
 B)False

Exam 27: Corporate Governance: External Responsibilities

Regarding ratification of pre-incorporation contracts,how has the CBCA resolved the problem presented by common law?

In addition to the licensing and prospectus provisions,the legislation has introduced further controls on the securities industry.Give a couple of examples.

Corporations are always liable in tort for contracts entered into with third parties.

The Criminal Code of Canada contains some offences that are applicable to corporate conduct.With respect to whistle-blower retaliation,it is an offence to

The principle that a person dealing with a corporation is entitled to assume that its internal procedural rules have been followed unless it is apparent that such is not the case is known as the indoor management rule.

Explain how directors and senior officers can be held liable when the corporation commits a criminal offence.

Offences under the Criminal Code of Canada are both criminal and regulatory in nature.

Schemes of government regulation resemble traditional criminal law because

Directors may become personally liable to the corporation for deficiencies if,when they pay out dividends,the corporation cannot meet

Under the regulatory offence of "strict liability," the standard that must be met for obtaining a conviction is

What is meant by the indoor management rule?

Explain why the insolvency and maintenance of capital tests are important when it comes to corporations.

In spite of the fact that a corporation does NOT meet the solvency test,it can

In order to avoid an environmental accident,a business should take all of the following steps EXCEPT

Hazel was deliberately cheated by a clerk at the Hamilton Bay Corp.Can the corporation be found guilty of a criminal offence?

A corporation that is not paying its creditors in a timely fashion is probably insolvent.

No knowledge of the law is a good defence to an absolute liability offence.

Law, society, and Business

The Machinery of Justice

Government Regulation of Business

The Law of Torts

Professional Liability: the Legal Challenges

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration and Intention

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Set Aside: Mistake and Misrepresentation

Writing and Interpretation

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

Breach of Contract and Its Remedies

Sale of Goods and Consumer Contracts

Bailment and Leasing

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

Corporate Governance: the Internal Affairs of Corporations

Secured Transactions

Creditors Rights

International Business Transactions

Electronic Commerce

Privacy

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